Explanation

• A purely competitive firm will produce where Price (P) equals Marginal Cost (MC) because this action maximizes profits.
• At this point, the firm achieves the highest level of profit by producing the quantity where the marginal cost of production equals the price it receives for its output.
• This maximizes the difference between total revenue and total cost, which is the definition of profit maximization in economics.

Explanation

The market structure of monopoly is characterized by a single firm producing a good that lacks close substitutes.

Explanation

• In monopolistic competition, product differentiation refers to offering products that are similar but not identical.
• This means that firms produce goods or services that are slightly different from those of their competitors, allowing them to distinguish their products in the market.
• Product differentiation can take various forms such as branding, quality, design, or customer service.

Explanation

In many developing countries, agriculture plays a significant role in the economy.

It is estimated that around 65% of total export earnings come from agricultural products.

Such as crops, livestock, and fisheries.

Explanation

The services sector typically contributes the largest share to Pakistan's GDP.

Explanation

A profit-maximizing firm under perfect competition will produce where marginal cost (MC) equals marginal revenue (MR), which occurs where marginal product (MP) is diminishing.

Explanation

Government spending is a tool of fiscal policy.

Here is tye tools of Fiscal Policy:

1. Government Spending
2. Taxation
3. Transfer Payments
4. Fiscal Expansion
5. Fiscal Contraction

Explanation

Explanation

• If fiscal policy is trying to promote stability and economic growth through tax cuts, it is using expansionary fiscal policy.
• Expansionary fiscal policy involves increasing government spending and/or reducing taxes to stimulate economic growth and boost aggregate demand.

Explanation

• If the elasticity of demand for a product is -0.5, this means that demand is inelastic.
• Inelastic demand indicates that a percentage change in price leads to a smaller percentage change in quantity demanded.
• Specifically, a demand elasticity coefficient between 0 and -1 signifies inelastic demand.